Tuesday, December 31, 2013

My thoughts on some socialistic policies adopted by Govts.


Any country will have sectors that do not earn but required to be funded for the development, well-being and sustenance of the community.

Some examples of sectors where subsidies are required are


  1. Food and Nutrition
  2. Water
  3. Primary Health
  4. Education
  5. Defense


However subsidies can be removed from other sectors like


  1. Art and Culture (Important but not essential)
  2. Entertainment (Important but not essential)
  3. Construction and Maintenance of religious institiutions (they can run on donations and charity of people but not through a secular government)



Lets see points 1, 2 and 4 of the subsidised list above:

Food And Nutrition:


Food Security Bill has come and it is laudable. I really appreciate it. But the way it is implemented has scope for misuse. 30 Kgs of rice per person per month is too much for an Indian family. I have personally come across people who sell it to provision stores. Even the distributors can hoard the provisions.Poor people (destitutes) who dont have a permanent address cannot avail this scheme at all.

An alternate scheme that I think would be good is government subsidised cafeterias distributed everywhere

  1. Food may not be completely free, say 8 Rs for meals and 4 rupees for breakfast and 1 Rupee for tea/coffee. 
  2. All poor people can avail this irrespective of whether they have address proof or not.
  3. Will prevent misuse of the provisions.
  4. Will give employment to many people.


I wish governments adopt this policy.

Water:

As Arvind Kejriwal rightly said Water is the lifeline. Charging for it is criminal. However considering the huge population and lack of water what we can do is
1. Limit the water subsidy to poor people
2. Limit the water subsidy to basic usage (potable and basic hygene)

By making 700 Ltrs free and charging full if the usage exceeds more than 700 Ltrs,  AAP achieved both the points above. Note that this is not a robinhood scheme where you steal from one and give to another. The people who can afford (reflected by their high usage) will just pay fully for their own usage not for others.
This will also ensure that people conserve water by not exceeding the usage.

However the limit 700 Ltrs is a bit high. Considering a leniant 100 Ltrs of water per head, a 4 member family uses only 400 Ltrs of water per day. So limiting the margin at 400 Ltrs would be better.

Education:

We definitely need subsidies for eductaion, without that atleast I could not have completed my BE. Those who have taken subsidies (Govt Seat) and now tell that it is not needed are hypocrites.

A govt seat subsidy has following advantages:
1. It will provide an incentive for students to study hard.
2. It will allow poor students to fund their education.

Recently during my wife's PG admission, the government removed all GM seats and gave it to management of colleges. The private colleges did a comed-k entrance and charged 10x, 20x for
the same seats that were subsidised the previous year. Because of this we could not afford some good seats though she had good ranking. Now even for BE they had brought the same policy but people opposed fervently and forced the Govt to withdraw it.

According to me the college should distribute the seats as follows.The ratio could be varied, but the model should be somewhat like this.
1. Completely Government Subsidised seats
2. Private seats where there is 50% Govt Subsidy and 50% for college management to charge based on the quality they provide.
3. 100% private seat where govt will not interfere.

AAPs approach of
1. Monitoring donations (there by making it white) is laudable.
2. The idea of completely removing management seats might be an hindrance to competition and quality. We can have an option of management seats once in two years atleast.
 
I think this model is a combination of capitalistic + socialistic approach.